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Mike Carr: Factory Output Report Offers Plenty of Good News

By    |   Friday, 01 Jul 2011 11:30 AM

The Institute of Supply Managers offers a snapshot of conditions at the factory level each month.

Overnight, reports for June came in from China and Europe that showed slight declines in activity from May.

The U.S. Manufacturing Index for June countered that trend and rose to a value of 55.3. Any reading above 50 is generally associated with economic expansion. European and Asian indexes were generally consistent with continued expansion even though they were a little lower than the previous month. Declining economic conditions in Italy, Ireland, Spain, and Greece were confirmed by the indexes.

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Bottles of beer are seen at the production line.
(Getty Images photo)
Ever pessimistic economists had expected to see a decline in the U.S. data. Bloomberg surveyed 77 economists and found that they expected to see a drop to 52. The most optimistic forecast a reading of 55. All were wrong, and most notably, all underestimated the strength of the economy.

New Orders, a separate index, were also up for the month, marking the 24th consecutive increase for that indicator. This is generally positive for the economy looking forward.

Surprising strength was seen in the employment number. The index for employment was 59.9, with 34 percent of respondents seeing increased employment opportunities and 56 percent seeing no change. This makes 21 consecutive increases in the employment index.

ISM reports are good leading indicators of the economy. The new orders number in particular has a good record of turning dramatically lower prior to the start of a recession. Today’s report is consistent with a stronger than expected economy in the second half of the year.

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The Institute of Supply Managers offers a snapshot of conditions at the factory level each month. Overnight, reports for June came in from China and Europe that showed slight declines in activity from May. The U.S. Manufacturing Index for June countered that trend and...
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2011-30-01
Friday, 01 Jul 2011 11:30 AM
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